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Crude higher on OPEC production cut rumors


by Elaine Frei
September 28, 2006

Crude oil prices were up sharply on Thursday on rumors that the Organization of Petroleum Exporting Countries had reached an informal agreement on a production cut. Saudi Arabia has already started cutting production and it is believed that Nigeria will cut its production by 5 percent beginning October 1. November contracts for Brent crude added $1.32 to $63.54 per barrel in London, while West Texas Intermediate for November delivery was $1.01 higher to $63.97 on the New York Mercantile Exchange.

Meanwhile, natural gas prices dropped after new inventories data showed that US stockpiles were up by 77 billion cubic feet last week. While the gains were slightly lower than had been expected, the rise indicates that inventories will be at 3.3 billion cubic feet by the end of October, a plentiful supply even if winter in the US is longer and colder than usual. Nymex Henry Hub dropped nearly 22 cents to $5.45 per million British thermal units.

In the metal markets on Thursday, gold added 1.1 percent to $604.20 per troy ounce. The gains came on news that gold output at one South African mine will be down by around 60 percent in the second half of the year due to a fire there. The rise in the price of gold sent other precious metals higher as well. Silver gained 0.2 percent to $11.62 per troy ounce, while palladium was 0.6 percent higher to $318 per troy ounce and platinum added 1.1 percent to $1,152 per troy ounce.

Among base metals, copper dropped 2.1 percent to $7,460 per tonne despite strike concerns in Canada. Zinc was also lower by 1.2 percent to $3,360 per tonne. Nickel, however, added 1 percent to $28,850 per tonne and aluminium was 2.3 percent higher to $2,597.5 per tonne.



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